Otago's property boom ranges from recovery to crisis, to speculators, inflated prices, hard-pressed first home buyers and visions of affordable housing subdivisions. Business reporter Simon Hartley takes a snapshot from Colliers Internationals' annual property review, with Colliers' Dunedin-based associate director Dean Collins.
Otago's property market, commercial, retail and residential, is thriving, but Queenstown, Wanaka and Dunedin are all at different parts of the upswing cycle.
In Dunedin, the commercial property market was continuing to recover and sentiment was becoming increasingly positive, but Mr Collins noted a decline in the university roll meant increasing vacancies in student accommodation properties.
University rents were "flat'', following several consecutive years of increases, and with students demanding higher quality accommodation, there were more vacancies of poorly maintained properties.
While overall student vacancy rates had "edged higher'', investment property demand had "significantly increased'' from out-of-town buyers, which compressed rental yields further because of limited supply.
He said the combination of low interest rates and a growing number of investors from offshore, local institutions were keeping office property conditions "strong''.
"Dunedin's commercial property market continues its recovery, with construction, investment activity, confidence and positive tenant demand across the sectors driving growth not seen for the past six or seven years,'' he said.
Mr Collins expected capital values to keep increasing and growth to continue over the medium term across all the property sectors.
"The trend towards upgrading and refurbishing existing buildings continues, with the warehouse precinct between Queens Gardens and Police St a notable centre of activity,'' Mr Collins said.
"Refurbishment work is bringing more office space to the market, with much of it being taken up,'' he said.
Vacancies in retail properties in Dunedin had been higher than usual, but the market was picking up and vacancies were declining, especially in prime areas, he said.
Prime industrial property was becoming more popular with investors, with a trend towards new developments continuing as business confidence grew.
"There's a continuing gap between prime and secondary properties, with prime commanding high rents while secondary buildings are experiencing higher vacancy rates,'' he said.